Highlights

  • Credit Acceptance shows 30.54% basic EPS growth, a P/E of 12.02 and PEG of 0.56.
  • Second quarter net income was $135.9 million, against $87.4 million a year earlier.
  • Credit Acceptance repurchased 628,221 shares for $320.3 million in the first six months.
  • Liquidity was $1.4 billion at June 30, 2026; total indebtedness was $6,286.2 million.

Growth, P/E and PEG sit side by side at Credit Acceptance (NASDAQ:CACC), an undervalued growth stock: basic earnings per share grew 30.54% over one year, the trailing twelve-month P/E ratio is 12.02 and the PEG ratio, on an expected basis, is 0.56, with shares trading at USD 543.52 on October 28, 2026, up 0.18%. In its latest disclosures, the vehicle finance company completed a $450.0 million Term ABS financing on May 5, extended its revolving secured line of credit maturity on June 9, and reported second quarter 2026 net income of $135.9 million on August 4.

Based in Southfield, Michigan, and incorporated in Michigan, Credit Acceptance provides financing programs that enable automobile dealers to sell vehicles to consumers regardless of their credit history. It works through a nationwide network of dealers, paying an advance or a one-time purchase payment for each Consumer Loan assigned to it. The company reports one operating segment, and all of its revenues come from the United States.

Growth: Second Quarter Earnings, Revenue and Loan Volume

Consolidated net income was $135.9 million in the second quarter against $87.4 million, and $271.7 million for the six months against $193.7 million. Basic earnings per share were $12.97 against $7.55, and diluted earnings per share were $12.66 against $7.42. The company said the quarterly increase was primarily due to decreases in operating expenses and provision for credit losses.

Total revenue was $587.4 million against $583.8 million, with finance charges of $546.2 million, up 1.0%. The average Loan portfolio balance was $8.0 billion, consistent with the second quarter of 2025. Operating expenses were $134.1 million, down 13.8%, reflecting the absence of a $23.4 million contingent loss recognized in the second quarter of 2025 and lower salaries and wages. Total provision for credit losses was $159.2 million, down 7.8%.

Consumer Loan assignment unit volume declined 1.0% to 84,615, while dollar volume grew 0.1% to $1.0 billion. The company said monthly unit volume returned to year-over-year growth in June, and that growth continued into July. It enrolled 1,456 new dealers and had 11,004 active dealers during the quarter.

Valuation: P/E of 12.02, PEG of 0.56 and Management Commentary

The P/E ratio of 12.02 is measured on trailing twelve-month earnings, and the PEG ratio of 0.56 on expected growth. Total shareholders' equity was $1,588.9 million at June 30, 2026, against $1,523.6 million at December 31, 2025.

On the second quarter 2026 earnings call, Chief Executive Officer Vinayak Hegde said the company's objective is profitable growth rather than regaining volume at any cost, supported by disciplined capital allocation and a focus on maximizing long-term intrinsic value per share. He described a strategy of building a data-informed, AI-enabled company.

Capital and Balance Sheet: Repurchases, Debt and Liquidity

The company repurchased 262,963 shares, or 2.5% of shares outstanding at the start of the quarter, for $141.4 million. For the six months it repurchased 628,221 shares, or 5.9% of shares outstanding at the start of the year, for $320.3 million. Under the September 29, 2025 authorization of up to two million shares, 1,153,618 shares remained available at June 30, 2026.

Total balance sheet indebtedness was $6,286.2 million against $6,353.9 million at December 31, 2025. It comprised secured financing of $5,019.0 million, senior notes of $1,089.4 million and revolving secured lines of credit of $177.8 million. Interest expense was $107.4 million against $118.1 million, with the average cost of debt at 6.8% against 7.2%.

Unused and available revolving lines of credit were $1,432.2 million, and cash and cash equivalents were $1.4 million. Scheduled principal debt maturities were $1,352.2 million for the remainder of 2026 and $2,190.0 million in 2027. The company said it was in compliance with its covenants.

Disclosed Risks and Outlook

Forecasted net cash flows from the Loan portfolio declined by $39.1 million, or 0.3%, in the second quarter, against a decline of $55.8 million, or 0.5%. Forecasted collection rates declined for Consumer Loans assigned in 2023 through 2025. On the call, management said prepayments continue to arrive slower than forecast. The provision for credit losses on new assignments rose 8.8% to $77.6 million.

The company records an accrual of $82.6 million for legal matters at June 30, 2026. These include a putative TCPA class action filed April 7, 2025, which the company intends to defend vigorously, and a January 4, 2023 complaint by the New York Attorney General and the Consumer Financial Protection Bureau seeking injunctive relief, restitution, damages, disgorgement and civil penalties. The company said it cannot provide a meaningful estimate of loss for most matters.

Management stated that it believes cash flows from operations and financing alternatives will provide sufficient financing for debt maturities and future operations.